Further to the success of his blog on Lloyds, Creditor Liaison Team Leader, Chris Brown, takes a moment to put fingers to keyboard and finally, tell us how it is.

Starting a Debt Management Plan

Photo credit to Pat Pilon

It’s a common experience for many of our debt management clients, that the first few weeks of a plan can be the most difficult. Contact from creditors does not stop overnight and it is during this time that we write to creditors explaining our client/s have chosen to enter into a debt management plan. In order to progress with the plan, we ask creditors for information regarding what is owed to them and then await their replies…and in some cases we can be made to wait for an unreasonably long time while the contact to our client persists.

We understand how stressful this time can be for our clients, so we work as quickly as we can to deal with your creditors and get the process moving; our team are always looking for new ways to make this process as fast as possible but as you’d expect, there are a few obstacles in place to slow us down.

Some creditors are easier to contact than others

Obtaining information from Barclays, for example, can be like trying to get military secrets out of North Korea. We get a standard pre-prepared response which outlines their resolve to shun western conventions such as helpful call centre staff or debt management departments who use email. Instead we are given no other option but to send our correspondence in the post and wait for Barclays to sort, read and reply to our query.

We have hundreds of clients with debts to Barclays but despite this, they are unwilling to re-evaluate their procedures and consider allowing us to call them so that we can move our Debt Management Plans forward as quickly as possible.

Scripted answers to our queries

Another stumbling block for our team is speaking with non UK call centres. Some staff at companies such as Capital One and Blair, Oliver & Scott are trained to only answer certain queries with pre agreed scripts. This can often be like talking to a badly programmed robot whose owner didn’t install the basic logic software correctly. I could go on more about this issue but I suspect many of you reading this will also have experienced similar problems and so share my frustration.

Photo credit to Douglas County History Research Center

Using data protection to slow down the process

We take the protection of our clients’ personal information extremely seriously and expect creditors to do the same. However, recently there have been a couple of creditors who appear to be abusing the Data Protection Act, making obtaining information and setting up payment arrangements as slow as possible. Capital One, for example, reject on a daily basis countless letters of authority (which permit us to speak on our clients behalf) claiming that the signature does not match the one they have on their records.

It’s as if they have somebody with a magnifying glass, who spends their day rejecting our authorities on the basis that the first letter is angled forward 45 degrees rather than the 46 degrees the debtor used on the credit agreement.

We applaud creditors who are moving with the times

Despite these problems, a vast majority of creditors and collectors are now accepting payments by BACS (Bankers’ Automated Clearing Services) which is much quicker than cheques. And a growing number of creditors (Allied International Credit, Moorcroft, Apex and JD Williams but to name but a few) are also now communicating with us by email, eliminating the need to wait for their letters in the post.

Each day our team is trying to communicate with creditors and grow relationships so that we can improve the processes – for you – our clients. We’re finding more logical, time and cost efficient methods of progressing a client’s Debt Management Plan with as little inconvenience and stress to either party.

Have your say

If you have any ideas which you feel creditors could consider to improve the process of Debt Management Plans, then why not have your say here too? Consider your thoughts carefully as we value your feedback and we will use some ideas to put forward to creditors as we develop our relationships with them.

Following on from our recent blog post about the debt collection letters sent to Lloyds TSB customers in debt management plans, this week we came across another instance where a debt collection company put a customer under pressure to pay back his debts.

This story initially came to light when “Phil”, the debtor, posted a question on the ClearDebt Community. You can view the community thread here: I am being pressured by a debt collection agency.

For anybody who is being pressured by debt collectors, here are some key points.

Is my debt being dealt with by an external debt collection agency?

People in debt can sometimes receive aggressive sounding letters which seem to be sent from an external debt collection company, acting on behalf of the original creditor. However in a number of cases we’ve found that this supposedly external company is actually just another trading name of the creditor. Companies often create this pretence as a collection tactic to add pressure and intimidate the person concerned. One quick and easy way to see if this is the case is to read the small print in the footer of the letter, where it should state if the collector is a trading style of the creditor.

Will they send debt collectors to my house?

A debt collector isn’t a bailiff – they do not have powers to force entry into your home and you do not have to let them in. Companies may threaten to send door step collectors but more often than not, this is all it will ever be, a threat. Door step collection is a very costly and inefficient way to recoup money and is an option very few companies use, although they are more than happy to threaten it.

Creditors will use ambiguous language in letters to lead a debtor to believe that a collector has been at their home. Phrases like “we called your house today” or “we have tracked you to your address” can lead debtors feeling that a collector may be at their door any moment, when in fact they have never been to their home. One well known bank were sending postcard sizes cards, similar to the type delivery companies often use, to debtors homes saying that they had called at their home that day. However they had not been to the debtors property but in fact had “called” via telephone.

I’ve received a letter containing a notice of court proceedings

Most people don’t know the in’s and out’s of the court system and creditors use this to their advantage. Check what you have received contains a court stamp, if it does not then this letter is not an official court document. If the letter makes reference to appointing a bailiff, remember that before a bailiff can be appointed a CCJ must be obtained. The court would then set a repayment amount and they could only apply for a bailiff if you did not meet this repayment.

What should I do if my creditor applies for a CCJ?

If your creditor applies for a CCJ the first thing you will receive is a County Court Claim form which you will need to complete and return within 14 days of the date of the form. Return the form to the Court as detailed on the claim form. As you owe the money, you should admit the debt and complete the form with your income and expenditure details, explain who else you owe money to and make an offer of payment.

Once you have returned the form to the court, the creditor/collector will receive a copy of your offer. They might object to your offer of payment (if they have applied for a CCJ then it’s unlikely that they will accept your offer of payment) so in most cases you will receive a Judgment after Determination. If this is more than you can afford then you can apply for a redetermination.

How to apply for a redetermination

In order to apply for a redetermination you will need to complete a N245 form. This form is used to establish your income and expenditure as well as how much money you owe to other creditors. Make sure you include all relevant details (but remain realistic) as they will use these figures to determine your monthly repayment amount.

When completing this form, you must tick both the suspension of the warrant box AND the reduction in the instalment order box. By ticking both boxes it will stop a bailiff from being appointed and the court will also review the repayment of the debt, normally setting a monthly instalment amount.

Be aware that there is a £40.00 fee charged by the court for processing the N245 form, although you may be exempt of paying this fee depending on your circumstances. You can apply for fee remission by completing an EX160 form.

If you maintain the instalment amount, set by the court, no further action will be taken. Further action will only be taken if you do not maintain repayments. If your circumstances were to change and you were struggling to maintain the payments, then you can apply to the court to review the instalment amount.

Pose your debt question to the ClearDebt team

The above is just a summary of the advice we gave recently to somebody in need, you can pose your own debt and finance questions here on the ClearDebt Community, or if you’d prefer to speak to somebody over the phone, you can reach us on 0800 019 2095.

Last year ClearDebt blogged briefly about how to check the license of a debt company with an explanatory video of Consumer Credit Register.

Well, the consumer borrowers champions Zero-credit whom occasionally guest blog here at ClearDebt have produced an excellent in depth video explanation of how to fathom the search page of the Consumer Credit Register.

How to check the license of a debt adviser

As Zero-credit states in the video,

with so many credit and debt companies being closed down, it’s easy to worry about picking a dud…

There is a remarkable amount of information available online, sometime it takes more effort than normal to uncover it.

Next week ClearDebt will blog a similar tutorial on a related topic, stay tuned.

ClearDebt’s Consumer Credit License is 0565479 and the company registration number is 5157741.

Following on from the post Lloyds TSB: letters to people in Debt Management Plans I wanted to think more about how creditors manage the behaviour of people in debt.

It feels odd writing this when Zero-credit is a consumer cooperative representing borrowers’ interests, but the fact is that many of us still do not bite the bullet when financial difficulties are taboo. But what is a creditor supposed to do when we don’t get in touch? Certainly not bring out “Counterfeit Lawyers 4 U”, that’s for sure!

Creditors to debtors are like teachers to pupils

Oddly, I am reminded of challenging classroom behaviour, or as teachers call the bulk of it, low-level disruption. Kids chewing gum, over-knotting school ties, chattering throughout the lesson on a non-uniform day – challenges to authority that we may equally apply to a creditor in the play of everyday life – sod you for adding charges, you overpaid git! Just as much as kids baulk at the reality of sitting GCSEs, so too are adults perfectly capable of omitting debts from a pressing to do list.

Whilst such actions demand reactions, a good teacher knows when not to apply sanctions. With a class of 30 kids champing at the bit, the last thing anyone needs is to escalate the situation. Thus, when confidence in the banks is at an all time low, turning the screws serves only to sever the few ties remaining and end any possibility of a desirable outcome. This is a dangerous precedent to set, when economic uncertainty is the norm.

What can creditors do?

In the teacher’s toolkit, alternatives to dishing out detentions and exclusions include creating layer upon layer of warnings and contrasts: a raised eyebrow, the look, standing close to a trouble maker, or rewarding the bad kid turned good, anything and everything to prevent confrontation. Interestingly, we are beginning to see signs of this from utilities providers. Plusnet, for instance serves a polite reminder that Internet connection may be lost if the bill is unpaid. The account holder simply acknowledges the notice before carrying on browsing.

Gentle reminders that I’ve got the power to keep you at break, stop your pocket money, or restrict access to services is, of course, how the vast majority of us parent our kids. If the creditors would only stop and think about it, austerity Britain is one great big kid with more people committed to credit than any previous recession has witnessed. Getting out of this mess is a learning curve for us all, but one thing’s for sure, scaremongering the cash-strapped taxpayer who bailed you out only to find that you still got your bonus is not the way forward.

Chris Brown, a member of the team who has worked as a Debt Management Plan Customer Service Officer and now works in the creditor liaison team, shares his views on Lloyds TSB.

Having worked in customer service for Abacus (part of ClearDebt Group plc), I have spoken with many of our clients on Debt Management Plans who have received correspondence from their creditors, which has caused them a great deal of concern. The letters in question are making demands for payment and threatening legal action.

Despite the fact that at some point or other, every lender is likely to send letters of this description, there has been and still is a repeat offender that is constantly filling up the letter boxes of their customers – Lloyds TSB.

Lloyds TSB Scare Tactics

As soon as an individual is no longer able to afford the contractual payments for a debt with Lloyds TSB, at least 500 square miles of rainforest is reserved and 50 lumberjacks employed to provide paper for the letters that will be sent daily until the debt is paid off. At least 5 species of rainforest creatures will become extinct and the debtor’s postman is 10 times more likely to suffer from arthritis in their post delivering arm during this period. This is not entirely true but it is in the Lloyds spirit of exaggeration and scare tactics.

The letter that causes the most concern, in my experience, is sent under the name SCM (Sechiairi, Clark & Mitchell) solicitors. They claim to be instructed by Lloyds to contact you because “despite several reminders your account remains out of order”. It goes on to say, if you do not pay them, legal proceedings may be issued at your expense. You are then “strongly urged to make immediate payment”.

The whole letter paints the image of ruthless legal professionals who take great pleasure in unleashing the full fury of the legal system against any individual unfortunate enough to cross their path. They are in fact a collections department of Lloyds.

Should you ignore the Lloyds TSB letters?

Having spoken to Lloyds about these letters they say the majority are sent during the process undertaken when an account is passed from their Financial Management Unit to their Central Debt Recovery department and apparently can be ignored.

So if they can be ignored, why send them?

I accept that letters should be sent to inform a debtor that their account is being handled by a new department within Lloyds (which they are), but to send a letter that gives the impression that court proceedings with be issued when they will not, is beyond unnecessary.

In addition to SCM solicitors they also have other collections departments that go under the names MHA collections and BLS collections (you can see some of the letters that they send here: MHA Collections letter, BLS Collections letter, SCM solicitors letter). It appears Lloyds want to give the impression that hundreds of mercenary debt collectors and legal teams are pursuing the debt on their behalf and are gathering on mass outside your front door.

Cutting unnecessary costs

After having to be bailed out by the tax payer, who now own over 40% of the company, I would have thought Lloyds would be looking for ways to cut unnecessary costs. A good way to start would be to stop sending out these letters to people who have found themselves in financial difficulty and have since taken responsibility to seek professional help.

In the time it has taken to read this, because of the intensive deforestation required to support Lloyds’ need for paper, the Borneo Jungle Ferret no longer has a habitat and is extinct. There is no Borneo Jungle Ferret, I made it up. The same way Lloyds made up MHA collections who may be taking legal action against you.